Entrepreneurship: the ultimate white privilege?

2016-04-04 07:54

Lethabo Sekele

Entrepreneurship: The Ultimate White Privilege?

The politics of whiteness or white privilege centre around the systematic manner in which various institutions in society perpetually benefit white people. It is posited that through various historical processes, particularly colonialism, Europeans have inherited a disproportionate amount of power and resources across the globe and this has continued to be the reality even in post-colonial society. In the case of post-apartheid South Africa, white privilege is not only limited to getting away with some indiscretions such as white collar crime but also means that white people have and continue to benefit economically, politically and socially from the legacy of apartheid. As uncomfortable as the conversation might be for some, it is impossible to have a discussion on inequality in South Africa without making reference to and acknowledging the injustices of the apartheid system.

The legacy of this system is still evident today especially in areas such as access to quality education, health care and sanitation in black communities.

One important area which seems to be under- researched but warrants some investigation is understanding the reasons why there are more white entrepreneurs in South Africa than there are across other racial groups. In particular, the focus is on the over and under representation of white and black entrepreneurs respectively. The reason for this being that much of the research that has been conducted focuses on these two groups due to black South Africans forming about 80% of the population and white South Africans, although in the minority, possess much of the country’s wealth.

The ubiquitous rhetoric of Black Economic Empowerment (BEE) and various other mechanisms which government has employed to redress inequalities in enterprise development, explicitly speak to issues of white privilege which persist in the enterprise development sphere. The disproportionate representation of white entrepreneurs is not unique to South Africa only. A study conducted in the United States (US) found that entrepreneurs were disproportionately white and male, making up about 84 % of the total number of entrepreneurs in the country. This is despite the many years of having dismantled racial segregation and having the strongest and largest economy in the world which provides an enabling environment for entrepreneurs.

In light of the findings of this study, one is then inclined to ask what it is that perpetuates this disproportionate representation of white businessmen despite the availability of resources to other groups. While a historical account which cites reasons such as colonialism and/or apartheid might be an immediate and obvious answer for most, a 2013 study conducted by the University of Cape Town, indicated that the then 5 million black South African middle class opted to join the corporate world rather than start their own businesses. Another study by Richard Shambera (2013, Tshwane University of Tehcnology) found that there is a general lack of an entrepreneurial spirit amongst the South African youth, particularly the black majority. This is despite the strong entrepreneurial support structures provided by the government through organisations such as the National Youth Development Agency (NYDA) which provides funding in conjunction with other programs to guide budding entrepreneurs. The findings of Shambare’s study nullify arguments related to the lack of access to an enabling and facilitating environment for enterprise development and points to the need to explore more reasons as to why the white minority are overly represented in entrepreneurial activities in South Africa.

Accounting for the lack of black entrepreneurs: Structure versus agency

Enterprise Development is an important development imperative in South Africa and is seen as one of the main solutions in dealing with the high unemployment rate amongst the youth. Issues of unemployment and poverty in South Africa unfortunately exist within a complex set of other social issues and cannot be considered an independent variable.

While many would like to believe that we live in a meritocratic society, a sociological school of thought referred to as structuralism posits that people are the product of various structures which can either enable or constrain them in certain endeavors. In this context, the proponents of this theory would argue that individual traits and psychological factors are far overshadowed by societal structures which are designed to benefit only the elite groups in society. For example, education is viewed as an important determinant of one’s upward social mobility and is important for the acquisition of necessary skills required to participate meaningfully in the economy. In South Africa, the two-tiered private-public education system means that not everyone will enjoy equal opportunities because of the level of the quality of the education that they have received. Race and ethnicity are closely related to this issue of access to education because the majority of the recipients of public education, which is characterized by a lack of resources and a shortage of skilled staff, are mainly black and concentrated in townships and rural areas. The consequence is of this is that the minority white children in urban areas attending private schools have better chances of accessing

opportunities and increasing their levels of education. Historically, various structures of a socio-political and economic nature, have afforded white citizens better prospects in terms of meaningful participation in the economy and consequently in entrepreneurship.

However, while the structuralist perspective offers some very valuable insight into understanding issues of privilege, it has been criticized for its deterministic outlook implying that individuals born into certain situations will be trapped and will continue to reproduce that situation. Alternatively, the theory of individual agency postulates that individual attributes are an important factor in determining the fate of individuals. It acknowledges the role played by structure but argues that it does account for why some people are able to come out of poverty and move from the working class to the middle to upper class. In this context, subscribers of the theory of individual agency would argue that there have been numerous entrepreneurs who come from underprivileged backgrounds where their situations seemed hopeless but somehow managed to overcome them. There are a number of successful black entrepreneurs such as Lebo Gunguluza , Herman Mashaba and Phuti Mahanyele who have managed to overcome racial boundaries in a predominantly white sector. However, some might argue that the common thread in the individual stories of most black entrepreneurs is that they represent a particular class i.e. middle to upper class which means that they have enjoyed a certain level of privilege themselves such as access to tertiary education. Nonetheless, these entrepreneurs have demonstrated that one’s skin colour need not be a barrier to pursuing entrepreneurship.

The structure versus agency debate enables us to move beyond simplistic explanations of phenomena and encourages a holistic approach to making sense of some pertinent issues in our society. On investigating issues of racial disparities in entrepreneurship in South Africa, four recurring reasons for these disparities were identified: historical apartheid, lack of financial resources, lack of human capital, psychological traits and the social capital explanation.As previously discussed in the former part of this article, the legacy of apartheid remains one of the key explanations in understanding the under-representation of black entrepreneurs in South Africa. It was under the apartheid system that black people were not allowed to own any businesses and the government did not create enabling structures to encourage entrepreneurship in the black community. Furthermore, as previously touched on, not investing in quality education for the black masses meant that they were excluded from engaging in meaningfuleconomic activities. Their white counterparts on the other hand have accumulated years of generational wealth which also includes family businesses and entrepreneurial skills.

Access to financial resources for start-up capital is connected to the previous point on generational wealth where the majority of white entrepreneurs have access to financial resources through their families and other networks. Unfortunately many black people do not have that financial head start and due to living in poverty, no matter how innovative they may be – the desire to turn their ideas to a profitable business is dwarfed by the lack of funds. Human capital refers to those social and individual attributes which enable individuals to succeed in entrepreneurship. For example, there appears to be a strong correlation between level of education and entrepreneurship, which means that education as a source of human capital is a predictor of the extent to which individuals are most likely to engage in entrepreneurial activities. Education in entrepreneurship is crucial because skills such as numeracy and literacy are required and as was previously stated, the lack of access to quality education for the poor black majority means that their urban-based white counterparts with access to quality education will acquire the necessary skills needed to succeed in business. Entrepreneurship is a Culture and a Mindset…Many proponents of the individual agency argument suggest that in order to succeed in business one requires certain psychological dispositions and personality traits regardless of their skin colour. In a study entitled In Search of Black Entrepreneurship conducted by the Nelson Mandela Metropolitan University (NMMU) , the black participants felt that black people did not have a psychological inclination to entrepreneurship. They attribute this to years of systematic suppression of their ideas and psychological oppression. According to one of the participants, "the former system has also encouraged a mindset that is afraid to take risks with what they’ve got, they’re afraid to gamble with what they’ve got". Individual dispositions and personality traits that one requires in order to venture into entrepreneurship include, determination and confidence. Confidence is particularly important and is perhaps unfortunately the one trait that aspiring black entrepreneurs might lack due to what Afro-Caribbean philosopher Frantz Fanon termed the black inferiority complex which is the product of colonial oppression. Conversely, the superiority complex of white individuals exudes the level of confidence required for them to boldly pursue entrepreneurship. The trait and mindset approach, however, still supports the idea that regardless of one’s race, class or gender, we live in a meritocracy where individual traits determine the extent to which one is most likely to succeed in entrepreneurship.

"So, how’s business?". According to author Rick Ed, in an article published in SMEs South Africa, white children grow up hearing the aforementioned phrase at a lot at family gatherings. According to Ed, conversations about business are uncommon in black families which means that white children grow up around entrepreneurs and inevitability learn to have that entrepreneurial spirit instilled in them. For white children therefore, entrepreneurship is a culture and a way of life that is instilled in them from a young age. In the field of sociology this is referred to as Cultural Capital and it assumes that there are certain values and beliefs that one holds about phenomena such as entrepreneurship which consequently influence one’s level of participation. These values and beliefs are usually the product of how one is socialized or raised.

Finally, one of the most important reasons for the disproportionate representation of white entrepreneurs in South Africa is access to social capital. Many of us are not oblivious to the importance of social resources in entrepreneurship which is commonly referred to as networking. social capital refers to the various social networks and memberships to multiple organisations such as sporting and religious groups which naturally increase the chances of individuals forming relationships with potential business partners and clients. This can be attributed to the fact that the more frequent interaction one has with others in various social contexts, the more they access information. Social capital is important insofar as it provides information, pooled labour and trust. Furthermore, it can be said that individual variations in entrepreneurship can be explained in terms of variations in social connectedness, the kinds of social networks people have, or the degree to which, or the form in which those connections are organized. Social capital is inextricable from human capital as it has been observed that individuals who possess the human capital of education and are of higher income tend to have more social networks inevitably exposing them to business opportunities. For white South Africans, social capital is available in the form of educated family members, connections and relationships in various industries spanning many years, which enable and facilitate entrepreneurial endeavors.

This article has attempted to provide a holistic understanding of why entrepreneurship seems to be predominantly limited to the white sector of the population with black South Africans beingunder-represented. It has been established that there are various complex issues to consider, however, we are living in a time where we are privileged to have measures in place that are attempting to redress the inequalities of the past and there are ample opportunities for black entrepreneurs to be innovative and own successful businesses. While it is acknowledged that there are structures that might constrain individuals, there are also those enabling and facilitating. In the new South Africa, it is important to be mindful of history but also to bear in mind that our agency is no longer as limited. Increasingly, we are seeing the emergence of social entrepreneurship, pro-poor innovation and enterprise development efforts through the Department of Trade Industry (DTI) and initiatives such as the Awethu SME incubation project which ensure that marginalized groups are not excluded. In my opinion, it’s literally a matter of decolonizing the mind, instilling confidence in black children and placing an emphasis on entrepreneurship education in South African schools.

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